Ireland's unpopular coalition government began to crumble on Monday, a day after agreeing on an EU-IMF bailout.
Cowen came under acute pressure after the Green Party said it would quit the coalition after the budget if a January election was not called and opposition parties demanded a snap election be held even before the budget.
But Cowen rejected the calls and effectively threw the ball back into the opposition parties' court to help get the budget through.
"There are occasions when the imperative of serving the national interest transcends other concerns including party political and personal concerns, and this is one such occasion," Cowen said.
"These [EU-IMF] negotiations in turn are taking place in the context of the budgetary arrangements coming into effect," he said, calling on parliament to pass the reforms.
Credit crunch
Ireland requested the bailout on Sunday to shore up its banks and budget against the effects of the global credit crunch. But early last week, Cowen had said the government was not in talks about a bailout.
The news only fuelled a sense of national outrage at the handling of the economic crisis and the prospect of a draconian austerity programme set to last for another four years.
"The people of the country do not trust him [...] I believe his credibility is in tatters now and the honourable thing for Cowen to do now is to stand down," said Noel O'Flynn, a member of Cowen's own Fianna Fail party.
The 2011 budget is due to be unveiled on 7 December.
The government is expected to announce a four-year austerity plan on Wednesday that will include deep cuts in social spending, reduce the number of public employees and add new taxes.
Unions have warned this could spark civil unrest: a student demonstration over planned fee increases turned violent earlier this month, and unions have organised a march to protest at the planned austerity measures on 27 November in Dublin.
Cowen's junior coalition partners, the Greens, said early on Monday that they would support the government only until the budget was passed and the EU-IMF bailout was in place.
Defections
But the defection of two independent members of parliament on whom the government depends for support threatened to scupper its passage.
Independent member of parliament Michael Lowry said he would support the 2011 budget only if the main opposition parties, Fine Gael and Labour, took part in devising it, which is highly unlikely.
Asked if he was concerned that an immediate election would delay the budget and IMF-EU negotiations, Lowry said: "Our government has said on numerous occasions that we are sufficiently resourced and funded up to next year."
The adoption and implementation of a deficit-cutting budget is usually a condition for EU-IMF aid payments.
Austerity plan
Meanwhile, European and IMF negotiators began thrashing out details of the rescue package which is dependent on a drastic 15 billion euro austerity plan.
Cowen said the government's four-year economic plan, to be announced on Wednesday, would involve 10 billion euros in public spending cuts and five billion euros in tax rises, on top of two years of harsh austerity and recession already endured.
It is expected to cut the minimum wage, slash social welfare spending, reduce the number of public employees and add a new property tax and higher income taxes.
But ministers said it would not touch Ireland's ultra-low 12.5% corporate tax rate, seen by some Irish as a symbol of national independence but as an irritant by many higher-tax EU countries.
A plan to restructure Ireland's banks, which had to be rescued by the state after a property boom fuelled by reckless lending collapsed, will be a central plank of the package.
With the IMF expected to contribute about one-quarter of the package, the euro zone's contribution is likely to be about 50 billion euros, German Finance Minister Wolfgang Schaeuble told party colleagues in Berlin.
(EurActiv with Reuters.)
